Research On The Impact Of Environmental Regulations And FDI On Industrial Upgrading

With the continuous deepening of reforms,China’s cooperation with other countries has become closer and closer.Thanks to foreign direct investment,Chinese economy has achieved tremendous development and its industrial structure has improved significantly.However,in recent years,due to the urgent need for capital for China’s economic development,the role of foreign direct investment in China’s industrial upgrading is no longer significant,Chinese industrial structure has developed problems such as uneven development and overcapacity.At the same time,the rapid development of China’s economy has also led to the serious destruction of China’s ecosystem,and frequent environmental problems have become a major obstacle in the process of industrial upgrading in China.The call for adhering to the green and sustainable development path is becoming more and more intense,and increasing the intensity of environmental regulation has become the main means for the government to control pollution.Therefore,studying the impact of environmental regulation and foreign direct investment on China’s industrial upgrading,exploring how to effectively use foreign capital,rationally formulating environmental regulation policies and promoting China’s industrial upgrading have important practical significance for China’s economic development.Firstly,this paper expounds the theory of industrial upgrading.Based on this,this paper analyzes the action mechanism of China’s industrial upgrading from two aspects,including environmental regulation and foreign direct investment.Environmental regulation has an impact on industrial upgrading mainly from three ways: social demand,enterprise entry and technological innovation.The effects of foreign direct investment on industrial upgrading mainly include capital effect,technology correlation effect,industry correlation effect and industrial structure optimization effect.Combining these two factors,this paper theoretically analyzes how environmental regulation affects industrial upgrading through foreign direct investment.Then,this paper summarizes the measurement methods of environmental regulation in previous literature.Then,the measurement methods of environmental regulation in previous literatures are sorted out.According to the actual situation of environmental pollution in China,the types of measured pollution(discharge of industrial wastewater,sulfur dioxide and soot)are determined in this paper,and the comprehensive environmental measurement index is selected for measurement.Then,using the national time series data from 2000 to 2016,this paper tested the correlation between environmental regulation and foreign direct investment by establishing multiple regression model and granger test model.Finally,by collecting panel data of 31 provinces and cities in China from 2005 to 2016,this paper introduces five influencing factors,including technological innovation,fixed assets,urbanization level,financial burden ratio and human capital.This paper studies the impact of environmental regulation and FDI on industrial upgrading from the perspectives of environmental regulation,foreign direct investment and cross-item.The empirical results show that :(1)although environmental regulation has a significant promoting effect on the introduction of foreign direct investment,there is no direct causal relationship between them.The level of economic development is the important reason of foreign direct investment.On the contrary,the rising popularity of education will have an inhibitory effect on foreign direct investment.(2)there is a positive and significant relationship between environmental regulation intensity and industrial structure upgrading in China,which is consistent with theoretical analysis and realistic environment.On the contrary,foreign direct investment is not conducive to industrial upgrading in China,and the cross term of the two,namely environmental regulation,has a positive impact on industrial upgrading in China through foreign direct investment.(3)technological innovation,fixed assets and urbanization degree all play a positive role in guiding China’s industrial structure to a certain extent,and the current human capital will have a significant negative impact.Although the financial burden ratio will also inhibit the adjustment of industrial structure,the relationship is not significant.